Inherited joint common tenancy but second hone

RateTartExtraordinaire

Hi,
I'm hoping someone on here can confirm my understanding on a tax implications on my inheritance.of part of the family home after my dad left his share to my brother and I in 2018.
I understand why he did it, my brother lives in the house and has autism. He has never left home and never will. He wanted to be fair to us both so he left us an equal share of his half of the home. My mother has always owned the other 50% share.
I left home young and have my own home. Now my share of the family home is technically my second home! I didn't and don't want it. Not unless everyone else is gone. It makes no sense for me to own a shared to me.
My mum wants to do the same in her will.
If I gift my share back to my brother and ask my mum to left her share of the home to my brother, will this untangle current situation?

eskbanker

Not sure I'm following why it needs to be 'untangled', what specifically is it about the current situation that concerns you?

RateTartExtraordinaire

Hi
Thanks for your question. I'm worried that my brother will need somewhere to live and he cannot support himself financially. 
When mum goes, it will already be a huge case for anxiety and stress. What I don't want on top of that is that we need to sell the house because I have to pay capital gains tax on my share of the property as a second home.

p00hsticks

.RateTartExtraordinaire said:

Hi
Thanks for your question. I'm worried that my brother will need somewhere to live and he cannot support himself financially. 
When mum goes, it will already be a huge case for anxiety and stress. What I don't want on top of that is that we need to sell the house because I have to pay capital gains tax on my share of the property as a second home.

I Think you have that backwards - there'll be no CGT to pay unless and until you either sell the house or dispose of it to a 'connected person' (e.g. your mother or brother). so as things currently stand your mother and brother can stay living in the house as long as they want to with no tax implications for you.

However, my understanding is that you would potentially be liable to Capital Gains tax if you now try to 'untangle' this by gifting your share to either your brother or mother. They are 'connected persons; to you and so for CGT purposes the gift would be assumed to be at the market value of your share, so on making the gift there would potentially be CGT for you to pay on your share of the rise in property value since you acquired it .  

It's too late now for you to do a deed of variation to alter your father's will to decline your inheritance, as it would need to have been done within two years of his death. If your mother predeceases you you could do a deed of variation them to forego your share of her estate in favour of your brother if he was still living. 

Keep_pedalling

If you transfer your share to your brother then you are likely to have a CGT liability on the gain in value of your share from the value at the time of your father’s death and the date you gift it to him even though no money changes hand. If you maintain ownership you will pat CGT on the gain of your share because it is not your primary residence not because it is a second home.

If your mother fails to change her will you can still avoid inheriting your share by making a deed of variation. Would your brother be able to cope on his own in the family home or would something like assisted living be more appropriate? 

RateTartExtraordinaire

p00hsticks said:

.RateTartExtraordinaire said:

Hi
Thanks for your question. I'm worried that my brother will need somewhere to live and he cannot support himself financially. 
When mum goes, it will already be a huge case for anxiety and stress. What I don't want on top of that is that we need to sell the house because I have to pay capital gains tax on my share of the property as a second home.

I Think you have that backwards - there'll be no CGT to pay unless and until you either sell the house or dispose of it to a 'connected person' (e.g. your mother or brother). so as things currently stand your mother and brother can stay living in the house as long as they want to with no tax implications for you.

However, my understanding is that you would potentially be liable to Capital Gains tax if you now try to 'untangle' this by gifting your share to either your brother or mother. They are 'connected persons; to you and so for CGT purposes the gift would be assumed to be at the market value of your share, so on making the gift there would potentially be CGT for you to pay on your share of the rise in property value since you acquired it .  

It's too late now for you to do a deed of variation to alter your father's will to decline your inheritance, as it would need to have been done within two years of his death. If your mother predeceases you you could do a deed of variation them to forego your share of her estate in favour of your brother if he was still living. 

I see. Thanks. 
I just assumed we would need to sell the house. I guess there might be a scenario where if she needs are I'm the future we would need to sell to pay the local authority. The plan is that if my brother needs support in the future. I would help or live together to cut living costs. I have a small income.

RateTartExtraordinaire

Keep_pedalling said:

If you transfer your share to your brother then you are likely to have a CGT liability on the gain in value of your share from the value at the time of your father’s death and the date you gift it to him even though no money changes hand. If you maintain ownership you will pat CGT on the gain of your share because it is not your primary residence not because it is a second home.

If your mother fails to change her will you can still avoid inheriting your share by making a deed of variation. Would your brother be able to cope on his own in the family home or would something like assisted living be more appropriate? 

Hi.Keep Pedaling, 
Thank you that's clear about the CGT and not being my primary residence rather than a second home.
I just hope I have enough when the time comes to be able to support us both. I think living together makes sense. So long as we get on.
I hadn't looked into assisted living arrangements. Do you know much about it. 
He is able to do household stuff to look after himself but he suffers from social anxiety when communicating and can get really stressed..so dealing with bills and banks could be tricky. I think it makes him vulnerable and I worry someone might take advantage of his good nature.

Bookworm105

sounds like you and your mother need to talk to each other to plan your brother's future.
"assisted living" means living in accommodation owned by others who are on hand to provide the support 
What is Assisted Living (Extra-Care Housing)? | Age UK

does he have any income of his own from which to pay household bills? Being left as sole resident in the house once mother is dead may help him with familiar surroundings but not much use if he cannot afford it, unless you plan to financially support him forever.
can you (he) afford to pay for visits to his own home by a care worker if he is unable to cope alone?

triggering CGT for you by disposing of your share of the house, whether now or later, does not seem to be the core point you need to be addressing. Source of long term money to support him seems more key 

RateTartExtraordinaire

Bookworm105 said:

sounds like you and your mother need to talk to each other to plan your brother's future.
"assisted living" means living in accommodation owned by others who are on hand to provide the support 
What is Assisted Living (Extra-Care Housing)? | Age UK

does he have any income of his own from which to pay household bills? Being left as sole resident in the house once mother is dead may help him with familiar surroundings but not much use if he cannot afford it, unless you plan to financially support him forever.
can you (he) afford to pay for visits to his own home by a care worker if he is unable to cope alone?

triggering CGT for you by disposing of your share of the house, whether now or later, does not seem to be the core point you need to be addressing. Source of long term money to support him seems more key 

He will have state pension when he reaches pension age, at 67 for him. He has been putting money away that my mum gives him. I'm not sure how much he has but he won't be eligible for benefits.

My mum could gift him.some.money now but what if it seen as deprivation of assets if she needs care?

AliciaProsecco

I was gifted a share, along with 2 others, of jointly owned property years ago. I did not want to sign form as aware of cgt. However, to avoid further quarrels I agreed. Now we are owners of house but other two refuse to sell house, remove furniture and somebody is living there part of the time. I have spent over £1,000 in legal fees in a short time and hundreds in my share of council tax. Definitely don’t want to go to court. They have refused all requests made by my solicitor and I just want them out of my life. If I gift them my share how can I get suitable valuation of property as they refuse to give me a key? Would a drive but valuation do? This is seriously impacting my health and I just want rid. 

RateTartExtraordinaire

I wanted to come back to update this post. 
Following a discussion with my mum and brother, my mum was in the process of updating her will and muted the possibility of leaving the house to my brother. The solicitor had a long discussion regarding the reasons for splitting this differently between siblings and said CGT reason was not really a valid reason in this instance. He said I would loose out on a large chunk of the estate to avoid a relatively small amount of CGT. He also explained how any potential IHT could be paid for from any funds in my mum's ISA but my mum's estate would be unlikely to pay any with current allowances and potential care cost as they are.
With all this Mum, decided to leave the will as is, with the estate split equally.

 @AliciaProsecco your situation sounds tricky. I don't know the answer to your question. I thought there was a hierarchy of who has a duty to pay the council tax. Someone who is living in the property surely has to pay the council tax before they would seek money from someone who isn't.
 If my brother was reluctant to relocate sell when it becomes unmanageable or unaffordable. I would hope he would see reason. It is his happy place, but a three-bedroomed house is not really the best idea for a single person on state pension.
Maybe if you start a new thread with the question of valuing a home you don't have the key for, someone will respond, who does.